Microsoft expects growth of more than 40 per cent for its Xbox Live online gaming service over the next year to 10m members, boosted by a “perfect storm” of game releases in the coming months.

Xbox Live has become the strongest differentiator between the Xbox 360 console and Sony’s PlayStation 3 and the Nintendo Wii. Its rivals have barebones services at present, although Sony is planning an ambitious launch of a virtual world interface called Home in the autumn.

Peter Moore, head of Microsoft’s Interactive Entertainment business, told the E3 annual video game convention in Santa Monica that it had outstripped expectations of reaching 6m members by this year’s show and had passed 7m.

In an interview with the Financial Times, he said the online element of Halo 3, Microsoft’s biggest franchise, would add members when it was published in September and exclusive online content for the Grand Theft Auto 4 game would give a further boost when it is introduced next spring.

Mr Moore said he didn’t believe Microsoft needed to follow Sony by cutting the price of its next-generation console. Sony announced a $100 price cut on Monday.

Microsoft also announced a deal with Walt Disney to release high-definition movies on Xbox Live and said its Xbox 360 Elite console launched in North America earlier this year, would soon be available in Europe and Japan.

The focus is expected finally to shift from consoles to games at E3, moved from the Los Angeles Convention Center to the more low-key seaside suburb of Santa Monica this year.

The Electronic Entertainment Expo has been dominated by Microsoft, Sony and Nintendo for the past two years as they tantalised the public with glimpses of their next-generation consoles.

But all three have now been launched and battle has commenced, with price and the quality of games proving the key factors so far in sales.

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